Claims to an $800,000 finder’s fee have fallen flat for one B.C. mortgage broker following a recent B.C. Supreme Court decision.
Vancouver-based Citifund Capital Corp. entered into an agreement with local developer Vintop Development Corp. to help find lenders for a construction project, according to a March decision penned by Justice Jan Brongers.
The agreement noted Citifund would be entitled to a commission if it found a lender that offered borrowing terms within certain guidelines or that were acceptable to Vintop.
Vintop is developing a two-tower project in New Westminster, which includes a 32-storey tower with 204 market strata units and an eight-storey tower with 66 non-market rentals. The project is being developed in partnership with BC Housing and non-profit Performing Arts Lodge.
Citifund claimed it had fulfilled its obligations after it got a commitment from Trez Capital LP, which had offered a loan on terms Vintop previously deemed acceptable.
But Vintop countered in its court submissions that the terms ultimately were not workable for the developer.
Trez’s loan offer would have assumed that BC Housing would provide further project financing, while also taking a subordinate lending position to Trez. In other words, Trez wanted to be repaid first.
And in pursuit of seeking a funding agreement with Trez, Vintop signed a letter of intent for an $82.5-million loan and paid a $170,000 deposit in spring 2019.
“At first blush, there is some merit to Citifund’s argument that … Vintop implicitly indicated that the loan terms set out in this document were ‘acceptable’ to Vintop,” Brongers wrote, adding that she also needed to consider the surrounding circumstances.
That included taking into account the understanding by all parties – including Citifund and Trez – that BC Housing couldn’t accept a subordinate lending position.
“This was not simply BC Housing’s preference. It is a legislative imperative,” Brongers wrote.
But in exchanges between BC Housing, Trez, Citifund and Vintop, neither lender wanted to accept a subordinate lending position, and they struggled to settle on a co-lending arrangement.
The delays began to run Vintop towards legal deadlines by which they would need to stop marketing the project. By August 2019 it lost patience and invoked a 10-day notice to terminate the agreement. But Citifund continued to work towards a funding agreement.
Despite repeated notices that Vintop was no longer interested, Trez submitted a letter of commitment that still placed BC Housing as the subordinate lender, and Citifund then issued an invoice of $821,250 to Vintop, according to the decision.
Vintop never agreed to the Trez commitment and instead entered a deal with the Industrial Commercial Bank of China, which agreed to co-lending with BC Housing.
Brongers determined Citifund’s claim to the invoice amount was unfounded. She also set aside a counterclaim by Vintop that claimed Citifund breached its fiduciary duty by continuing to pursue an agreement with Trez after it had explicitly declined to continue with the process – a claim Brongers noted was intended to offset any claim by Citifund if it were successful.